CONSTRUCTION ACCOUNTS RECEIVABLE.
Accounts receivable in construction is not a finance problem — it is a process problem. Most subcontractors have $150K–$400K sitting in unpaid invoices with no systematic follow-up. A weekly AR aging review, a defined collections call cadence, and escalation triggers at 30, 45, and 60 days will recover more cash than any other single change you can make to your financial system.
The gap between what you have billed and what you have collected is the single largest controllable cash flow lever in most construction businesses. On a $5M revenue book, a 10-day improvement in average collection time frees approximately $137,000 in working capital permanently. That is not an accounting change — it is a phone call cadence. This page covers how to build the AR process that makes it happen consistently.
THE DOCUMENT THAT RUNS YOUR COLLECTIONS PROCESS.
The AR aging report is a snapshot of every outstanding invoice — organized by how many days past due each one is. It is the starting point for every collections action. If you are not running a weekly AR aging report, you do not have a collections process — you have a bank balance and a prayer.
| Aging Bucket | What It Means | Action Required |
|---|---|---|
| Current (0–30 days) | Within contract terms — normal | Monitor. Confirm receipt of pay app. |
| 31–45 days | Approaching late — first action window | Courtesy call. Confirm approval status. Ask for ETA. |
| 46–60 days | Late — collections call required | Direct call to GC PM or AP. Get a specific payment date. Document the conversation. |
| 61–90 days | Significantly overdue | Escalate to GC project executive. Reference contract payment terms. Consider withholding new work if pattern continues. |
| 90+ days | Pre-lien territory | Send preliminary lien notice in states where applicable. Engage legal if no resolution. Do not continue work without payment plan. |
The number that matters: Your Days Sales Outstanding (DSO) — total AR divided by average daily revenue. If your DSO is 55 days and your contract terms say net 30, you have a 25-day collections lag that is costing you cash every month. Track it monthly. The goal is to drive DSO toward your contract terms — not toward zero, toward the agreed payment cycle.
THE WEEKLY CADENCE THAT KEEPS AR MOVING.
Pull the AR Aging Report Every Monday
Every Monday morning, the AR aging report is reviewed. Every invoice that crossed into a new aging bucket since last week gets flagged. New 31-day invoices get a courtesy check. Anything newly at 46+ days gets a call scheduled for that day. This is not a monthly activity — it is a weekly rhythm. The collections cadence that runs monthly catches problems after they have compounded for 30 days. Weekly means you are in the problem within 7 days of it developing.
Courtesy Confirmation Call
At 31 days, make a brief call to the GC's PM or AP contact. Not a collections call — a confirmation call. "Just wanted to confirm you received our pay app for [project] submitted on [date] and there are no open questions on it." This call has two purposes: it confirms the pay app was actually received and entered into their system, and it plants a flag that you are tracking this invoice specifically. GCs who know you are watching pay faster than GCs who think you are not paying attention.
Direct Collections Call — Get a Date
At 46 days, this is a collections call. The goal is a specific payment date — not "it should be coming soon" but "our check run is Friday the 14th and you are on it." Call the GC's PM first. If no resolution in 24 hours, call the GC's project executive or accounting manager directly. Document every conversation: date, who you spoke to, what was said, what was committed to. That documentation is your evidence if this escalates to a lien or legal action.
Escalation — Executive Contact and Written Notice
At 61 days, escalate to the GC's project executive or VP level. Send a written notice — email is fine — referencing the invoice number, the amount, the original submission date, and the contract payment terms. Do not threaten legal action in the first written notice — state the facts and ask for a response within 48 hours. The written notice creates a paper trail and signals seriousness without burning the relationship. Most invoices get paid at this stage.
Preliminary Lien Notice and Legal Escalation
At 90 days with no payment plan in place, send a preliminary lien notice in states where it is applicable. This is not filing a lien — it is the formal notice that preserves your right to file. In most states this notice must be sent within a specific window from first furnishing labor or materials. If you have missed that window, consult construction legal counsel immediately. A mechanics lien is one of the most powerful collection tools available to subcontractors — but only if the procedural requirements were met.
REAL OUTCOMES FROM A SYSTEMATIC COLLECTIONS PROCESS.
These are not extraordinary results. They are what happens when a systematic weekly collections process replaces reactive bank-balance management. In every case the money was already owed — it just had no one consistently working to collect it.
WHAT BREAKS THE COLLECTIONS PROCESS — AND HOW TO FIX IT.
FREQUENTLY ASKED.
